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Sri Lanka Asian shippers meet mounts liner challenge

15th August 2009

Aug 15, 2009 (LBO) - Asian shippers meeting in Colombo said they would lobby governments in the region to reform laws to prevent price fixing by shipping lines acting like cartels which they said hurts export-based economies. Sri Lanka Shippers’ Council chairman Randolph Perera said the island lacked the laws to prevent anti-competitive practices by shipping liner cartels, unlike Europe which recently introduced new rules to protect shippers.

“We’re lobbying very hard with the government,” he told a news conference after the fifth Asian Shippers’ Council annual meeting held in Colombo.

“This is now a good period in which to strengthen our case as the government is doing a lot of development in the shipping sector.”

John Lu, chairman of the Asian Shippers’ Council, said that despite the downturn in trade, shipping lines were trying to artificially jack up prices that would hurt the region’s export economies.

“Fair trade is important for export-oriented Asian economies in which shippers contribute significantly to national economic growth,” Lu said.

“If a cartel system is allowed to continue it means the cost of shipping your cargo or product will be artificially increased which will hurt the economies of Asian countries.”

He said in Chinese shippers paid seven billion dollars just on surcharges alone in 2008.

He said shippers were already badly hit by a slump in orders and lower prices and the unfair trade practices of shipping lines would only worsen their plight.

He said he hoped governments in the region would follow the example set by China and India which recently brought in competition laws to prevent collusion by shipping lines in fixing freight rates.

“Asia is the world’s largest merchandise exporter. We export about a trillion dollars worth of goods a year,” Lu said. “Yet we do not have proper protection against monopolistic practices towards shippers in Asia.”

Freight rate hikes and surcharges imposed by shipping lines acting together increase the cost of transportation of the region's exports, Lu said.

“If market forces are allowed to prevail the freight price would be very low, because we’re also getting very low prices for orders.

“But in this very depressed market the lines are able to artificially push up rates.”

The ASC said in a statement they opposed plans by shipping lines to impose a peak season surcharge, saying the move defies logic at a time when cargo volumes have slumped and there is huge overcapacity in shipping.

The ASC said they continue to call for all-in freight rates by shipping lines, including surcharges and other levies, to ensure transparency in pricing and better cost management.

“Liner companies are global multinationals - very powerful financially, politically, while shippers are mostly small and medium companies with many exporting commodities of low value,” Lu said.

“So when a cartel system is in place it is unfair to shippers, especially small shippers.”

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